Ever since a new middle school and high school was proposed five years ago, there have been discussions over the true needs and alternative options in order to keep the costs down while continuing to provide excellent educational standards. Now with a bond for a new build on the Town Meeting Day ballot (Article 7), the board explains why this is the most prudent option for taxpayers.
Courtesy MVSU
The proposed new middle school and high school on the Woodstock campus is up for a bond vote of $99 million, March 5.
Why do we need a new school building? Why can’t we just renovate and build additions to the current building?
There are many reasons why renovation of the existing building is not the right answer.
The latest is this: “The state of Vermont will not help with the costs of renovating the building based on how bad its condition is.” This is from a new report release last week from the Vermont School Construction Aid Taskforce on reinstating the school construction aid program, which has been suspended since 2007. See Feb. 1, 2024, report: Tinyurl.com/VTschoolConstructionAid.
One of the new criteria for participation is: “2(c) maximum or minimum thresholds for Facilities Condition Index for the school building (e.g. the state will not invest funds in any building above an FCI index of 65%…”
In 2022, our facility was given an Facility Condition Index (FCI) of 89.2%, which would make its renovation ineligible for construction aid, and as a likely result, more expensive for local taxpayers.
The FCI rating was the result of the Vermont school facilities inventory and assessment required by Act 72 of 2021 to the House and Senate Committees on Education. On April 13, 2022, the Vermont Secretary of Education presented the results of the statewide assessment. Our school district’s middle school/high school facilities were rated the second worst in the state – with the depleted percentage and value of 89.2%, meaning only 10.8% of its serviceable life remained at that time.
The state assessment, though dismal, was not a shock to the district, which completed its own comprehensive facilities assessment of the building In December of 2017. That assessment was conducted by a team of architectural, mechanical, structural, civil, landscape, code and foodservice consultants.
Their report of the assessment concluded: “The nearly 60-year old facility is maintained by an active and thoughtful facilities department and committee. With limited financial resources, they have kept the school up and running, well beyond the typical lifespan for such a facility. Many of the spaces serve their program better than should be expected under these conditions. However, much of the building and building’s systems are functionally obsolescent making it challenging to support 21st Century learning and teaching.”
Then, following more than a year of work involving school staff and community stakeholders, on March 19, 2019, the school district’s architectural consultants presented various options for addressing the many identified deficiencies of the building. Explaining why renovation is not a viable option, they advised: “Pursuing a ‘renovation only’ approach to the facility requires significant cost without addressing most of the solutions needed. It does not meet modern educational or efficiency standards, does not extend the life of the facility and is not a good dollar value.”
In summary, because the building is now almost entirely depleted renovation is not likely to significantly extend the life of the facility. The state recognizes this fact for buildings thus depleted and therefore disqualifies them for potential state aid to renovate. Renovation, therefore, does not provide a good cost-effective solution for taxpayers.
What if we do nothing?
We will spend millions of dollars to fix increasing problems with the failing building, with no upside benefits to our students or communities. There is also growing potential for a major problem to shut down the building for repairs. In addition to the recent $1.3 million emergency upgrade of the heating system, in the past few years, basketball games have been canceled mid-game due to snow and ice loads causing the steel supports in the gym to groan alarmingly and the cinder block walls to crack. Fixing the roof is estimated to cost $2.4 million. At a recent graduation ceremony, calcified septic system pipes caused sewage to back up onto the bathroom floors. Repairs to that system are estimated to cost $1.9 million and it is unknown whether the pipes can be accessed since they run through concrete supporting the weight of the building. These types of unplanned emergency expenses passed down to taxpayers will only increase as the building continues to fail.
These negative experiences have also prompted student attrition which has resulted in less efficient operations, and raised the “Per Pupil Spend” – the key driver of education tax rates under Vermont’s school funding system – leading to higher property tax rates. Should district enrollment decline to 800 students, the resulting tax rates will be higher than if we build the new school — with none of the benefits to our students.
The proposed new building is designed to accommodate 600 students. Student enrollment is declining throughout the state. Why does the MVSU School Board project that enrollment will go up in our school district?
There are many reasons to believe the district can achieve increased enrollment with the completion of the new building project. They include:
NESDEC Study: A 2021 enrollment study completed by the New England School Development Council (NESDEC) projects a gain by our district of 120 students by 2030. Consistent with the question’s reference to declining statewide enrollment, NESDEC also predicts declining enrollment for the New England region, but with specific regard to our district, they predict significant growth. Notably, the study did not assume the school district would build a new middle school/high school building or implement policies to further promote enrollment.
Halting Attrition: The poor conditions of the current middle school and high school building are increasingly cited by families residing in the towns of our school district as reasons for choosing to enroll their children at personal cost in other area schools. A husband and wife living in Woodstock recently reported that five of their daughter’s 8th-grade classmates opted to pay tuition to attend Hanover High School this year instead of continuing on to 9th grade at Woodstock Union High School. At $20,000 per student, the loss of these students alone results in a $100,000 impact to the district budget for this year and $400,000 over their high school careers, to say nothing about how losing students affects relationships with their peers and the school community.
Having the second worst school conditions in the state of Vermont, a state with some of the most antiquated school buildings in the country, is a liability to our ability to attract and retain students. Replacing this liability with an asset will have a positive impact on our enrollment by reducing annually the number of students who live in our district but whose families choose to have them attend other area schools.
Expanded Pre-K Programs: Our school district has made recent investments to add 3- and 4-year-old pre-K classrooms to all of our elementary schools, making ours one of the only school districts in the state to do so. As a result, new families have relocated to our district to take advantage of the opportunity to enroll their children in public school pre-K at no cost. The current waitlist for our district’s pre-K classes has 60 students.
Offering public school pre-K at no cost to parents makes our school district more attractive to families compared to others in the region. Since we began offering pre-K in 2016, we have consistently seen families relocate to our district from within the region for the specific purpose of taking advantage of these programs. For working families, public pre-K represents on average a $15,000/year annual savings per child over the cost of daycare, often enabling both parents to continue working or re-enter the workforce. For a family with two children, this represents a $60,000 benefit over two years of pre-K, helping to justify the expense of relocating to our district and explaining why these families are doing so.
Tuition students: In addition to students from our district’s seven member towns, the current enrollment of tuition students from 13 “school choice” towns demonstrates interest in our schools and the feasibility of students from these towns attending our schools. Implementing a structured program to increase enrollment with a new middle school and high school building has strong potential to increase enrollment from these and other school choice towns.
For example, in 2023, the adjacent town of Hartland reported sending 142 high school students to area schools, but only five to our high school. At our current tuition rate of $20,000, increasing enrollment from Hartland alone by 25 students would result in new annual local revenue of $500,000.
The MVSU school district is adjacent to more than a dozen school choice towns. With improved facilities, we can work to increase the number of students who choose to attend our schools from these and other choice towns. We believe our current difficulty competing for these students is in large part due to the conditions of the MS/HS facility and that these students’ enrollment elsewhere represents a loss to our district from historical enrollment sources.
Stated differently, we are looking to regain students from school choice towns we have lost to other area schools. They are already here in our region; a new school will incentivize them to come back to the MVSU community.
Killington’s Growth: Last year, Killington received approval from the state of Vermont under the Tax Increment Financing (TIF) program for the “Killington Forward” initiative. Projected to expand Killington’s Grand List value by an estimated $285 million, it is the largest TIF district in state history. In addition to 1,500 new residential units which are likely to be occupied largely by non-residents (and therefore unlikely to enroll students in our schools), the initiative includes construction of 250-300 workforce housing units intended for workers employed in the town. With 40% of the current U.S. workforce having school-aged children, an estimate of 100 new students enrolling in our schools as a result of the Killington real-estate development is conservative.
While not all of this will happen right away, Killington is growing. This growth will bring families with children. How many children is up for debate, but the true answer will not be zero, and even if it’s only 50 after 10 years’ time, that represents a quarter of the 200-student district-wide gain we are targeting.
How much will the project cost and what are the sources of the funding?
The current estimated project cost is $99,363,893. The primary funding source will be the $99 million bond (on the ballot March 5) with a number of other sources used to ease the impact of its repayment on taxpayers, including private fundraising and federal grants under the federal Infrastructure Reduction Act. The district is also in discussions with the Act 250 office about potentially levying impact fees on new construction projects in the district, which increase the need for school facilities and services.
How did the supervisory union arrive at the projected $99 million cost for the new building? Couldn’t we save money by scaling it back from $99 million?
The final cost was arrived at following provision of initial project costing by the project’s construction manager, PC Construction, which came in at $116 million. From there, the school district’s owner’s representatives, PCI Project Consulting (no affiliation to PC Construction) led a series of value engineering sessions, which resulted in $16.5 million in reductions to the project scope, resulting in a final project cost of $99 million.
Extensive scope, design, and materials reductions have already been made to reduce the cost to the $99 million. These include: reducing the building size by 6,000 sq ft, to remove all the barn-like architectural features over the classroom spaces, reducing by 25% the amount of glass in the building, substituting a turf field with grass, and reducing by 50% the geothermal portion of the HVAC system. The new building now has the same number of classrooms as the old building and further cuts would require reductions to the curriculum and programs offered by the school.
New standards for school construction projects adopted by the VT State Board of Education would allow our project to be $656 per square foot (SF). Our proposal comes in at $627 per square foot — well below that limit and is much cheaper than many other school construction projects in Vermont. Here’s how the project stacks up to other current and recent projects (in 2023 dollars):
- Burlington High School (current): $209M/225,000 SF = $836 per SF
- Danville Schools K-12 (2021): $76,015,000/120,000 SF = $633 per SF
- Allen Brook School K-12 (2022): $51,333,333/78,500 SF = $651per SF
- Central Vermont Career Tech Center (2021) $101,741,667/140,000 SF = $727 per SF
- Milton Elementary K-8 (current): $158,200,000/162, 155,000 SF = $721 per SF
What entity will provide the bond funding to the MVSU and what will the terms be?
Borrowed funds will come from the Vermont Bond Bank and/or the United States Department of Agriculture’s (USDA) rural innovation program. The USDA has recently funded other Vermont school projects and offers favorable repayment terms and rates.
In 2023, the Vermont Bond Bank quoted the school district a rate of 3.75% for the project. Since then, municipal bond rates have dropped to 3.51%. The district expects this trend to continue and will work with its advisors and lenders to lock in an optimal bond term and interest rate to minimize impacts to voters.
Voter approval of the bond is necessary before the bond can be sold and the final term and interest rate confirmed.
How will the bond repayments impact local taxes?
Importantly, if voters approve the bond at the March 5, 2024, Town Meeting Day, payments for the new school will not begin until the summer of 2027, giving district taxpayers 3.5 years before the debt would impact their taxes.
The chart above shows the impacts of paying off the school bond on education taxes over time for one taxpayer paying on the basis of property value and another who is income-sensitized, both owning a home with a fair market value of $600,000. (Note: In Killington today, this would be a home with a Grand List value of $314,100. To calculate fair market value divide the Grand List value by the CLA, 0.5235.)
The chart above is meant show the isolated tax impact of the bond on taxes; since the state education tax and future CLA/reappraisal values are yet-to-be-determined for future years the actual tax amounts cannot be known precisely. Using fair market value of a property and a consistent placeholder for the state education tax, allows us to see the effect the bond alone will have.
There are further tax impact scenarios available at: mtnviews.org/s/Tax-Impact-Scenarios-011124.pdf. There you can see two scenarios showing how increases to enrollment at levels of 5 and 10 students annually could reduce amounts required to be collected in property taxes and accelerate repayment of the bond. A third scenario shows the impact to district tax rates of spending $1.5 million per year on emergency fixes while losing 10 students per year. This “do-nothing” scenario would actually raise taxes in the long term far more than building the new building, due to increases to “per pupil spend.”
Will the new building be more energy efficient and environmentally friendly? If so, how will this impact heating, cooling, and energy costs moving forward?
Yes, significantly. The current middle and high school is incredibly inefficient both structurally and in its heating/ventilation/air conditioning (HVAC) equipment. The building envelope—meaning the walls, insulation, windows, and doors do not effectively retain the heat generated by the building’s aging fuel oil boilers, requiring them to burn a high volume of oil just to heat the facility (the current building also does not have any air conditioning). As a result, the building emits 1.8 million pounds of carbon dioxide into the atmosphere every year—that’s equivalent to 81 trips in an airplane around the Earth.
The new school is designed to be “net-zero-ready” using energy efficient and sustainable high performance building materials and drawing on best practices in modern educational facility design. Incorporating sufficient, renewable energy systems such as solar and geothermal will allow the building to reach net zero. In other words, the amount of energy required from external sources to operate the facility will be equal to or less than the power the new facility generates—helping the environment while also being much less costly to operate in the long term.
Over a 40-year lifespan, the new building is projected to save district taxpayers $18 million compared to the old building’s costs of burning fossil fuels and maintaining antiquated heating systems. And this comparison is really not “apples to apples” considering the fact that in addition to providing heat when it’s cold outside, the new building’s HVAC systems will also cool the building when it’s hot outside, a critical feature considering climate trends over the next several decades. Also significantly, over a 40-year life span, a net-zero building will prevent 72 million pounds of carbon dioxide from being sent into the atmosphere.
What oversight will there be during the construction process? What happens if there are cost overruns and the construction costs exceed the bond? What are the contingencies for schedule and price variations?
PCI Project Consulting has been retained as the owner’s representative to provide project oversight. The project budget and bond amount include $5 million of contingency to address unplanned costs. If unplanned costs exceed $5 million, the school district would evaluate its options for addressing the overrun. These options could include project scope reductions to offset the costs, a supplemental bond article seeking voter approval to borrow amounts beyond the amount of the initial bond, or using available alternate funding sources, such as private fundraising amounts ($3.5 million has been committed as of January 2024), grant funding, or amounts available from the school district’s operations, such as budgetary surpluses or available fund balances.
For example, the new roof put on Killington Elementary this year has already reduced the amount of fuel needed to heat the building. These kinds of budgetary savings can offset unplanned project costs.
What happens if voters fail to approve the bond issue on Town Meeting Day on March 5? Is there a backup plan, such as a scaled back version of the new school or a renovation plan for the current building?
No. Anything short of replacing the current school building would be a poor use of taxpayer money. Further scaling back the building design would mean cuts to current programs, making it more difficult to retain and attract school choice students from whom our district currently receives nearly $2 million annually — amounts which offset tax rates for district homeowners. Without certain elective classes, music programs or sports teams, many of these students would choose to attend other schools. Accordingly, cuts to the new building that interfere with our ability to continue receiving these revenues would be penny-wise but pound foolish.
If the bond doesn’t pass in March, the school district would evaluate the results of the bond vote and determine its next steps. Given the clear and present issues with the current school building, the nearly $2 million in architectural and construction management services expended to date, and the $3.5M in private funding pledged contingent on replacement of the building, the School Board would likely try again for approval of the bond with increased focus on voter information.
Many people do not understand Vermont’s complex education funding system, but when they realize losing students costs them much more than investing in new buildings, they find it much easier to support the project.
Courtesy Ben Ford, chair of the finance committee
Above is a screenshot of an interactive calculator the school district will soon make available online for voters to use to estimate their specific tax impact of the bond over time.
